A US port operator wants full compensation from Maersk, which has terminated a collaboration deal with the partner prematurely. The company will pursue all legal options, it says in a response to WPO.
A container terminal in New York wants full compensation from Maersk after the carrier has canceled an agreement prematurely.
In April, Maersk terminated an exclusive partnership with US port company Global Container Terminals (GCT) without warning.
The contract covered three of Maersk’s services to the US and expired at the earliest in December 2021, but the carrier has decided to tear it up from May 1.
Instead, Maersk will send its ships to its own terminal across the Hudson River in neighboring state New Jersey, where Maersk’s port company APM Terminals runs a terminal in Port Elizabeth, which was recently expanded and modernized.
GCT is pursuing and will pursue all legal avenues to protect its interests
Global Container Terminals
Initially, GCT attempted to get a court to block Maersk’s moving plan, but those efforts failed on Friday last week.
Despite the initial defeats GCT still plans to collect damages from Maersk to make up for the losses it now expects as a result of the termination.
“While the federal court in New York determined that a preliminary injunction should not be issued, meaning that the damages suffered by GCT are compensable in monetary damages, GCT is continuing legal proceedings for full compensation against Maersk in order to protect our business and the integrity of the contractual commitments by our customers,”
Will lose 240 port calls
Maersk’s termination was communicated in a letter on April 10, where container line informed that it had decided to move its three services NAE, ECSA and WSCA away from GCT’s terminal on Staten Island.
In the letter, Maersk also offered compensation of approximately USD 5 million, which the company thinks is a generous offer.
GCT says, that is not even close to enough to make up for the losses on the deal, which is crucial to the terminal’s finances.
In 2019, the contract led to 153 port calls and revenue of USD 52.6 million. If it is terminated as of May, GCT expects to lose at least 240 port calls and USD 61.9 million in revenue.
This will send full-year operations into a deficit of USD 7.1 million and create doubt about the terminal’s future, it says. The port moreover fears losing more than 100 jobs.
The timing of the sudden cancellation, which comes at a time when the corona crisis has created unrest on the container market, has also garnered anger from the US terminal operator.
That is why GCT now wants financial compensation from Maersk to make up for the lost business.
Aired moving plans in 2018
While the termination came as a surprise to GCT, Maersk had already aired its plans to one day move to APM Terminals’ nearby terminal in Port Elizabeth, New Jersey.
When the parties negotiated extending the deal in 2018, Maersk’s head of procurement in the US mentioned that the carrier might move the routes to its own terminal during 2022. This is evident from a letter submitted as evidence in the case, and which WPO has read.
That the contract is terminated now is most likley because sapce opened up at APM Terminals earlier than expected. The terminal operator has invested USD 200 million in improvements and expansions in New Jersey in recent years.
Maersk intends to move its three routes from GCT on Staten Island to its own terminal in Port Elizabeth, New Jersey. | Photo: Mike /Ritzau Scanpix
It appears Maersk has calculated that the benefits of moving here and now outweigh the compensation to be paid for dropping the deal with GCT. WPO has been in contact with Maersk, which declines to comment as long as the case is ongoing.
GCT, which has a total of four terminals in the US and is owned by two infrastructure funds, states its readiness to continue battling the world’s largest container line.
“GCT is pursuing and will pursue all legal avenues to protect its interests relating to this wrongful action — a breach of agreement that Maersk has admitted in court documents,” the company writes to WPO.
